United Bancshares, Inc. (NASDAQ:UBOH) Passed Our Checks, And It's About To Pay A US$0.16 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see United Bancshares, Inc. (NASDAQ:UBOH) is about to trade ex-dividend in the next three days. Ex-dividend means that investors that purchase the stock on or after the 27th of November will not receive this dividend, which will be paid on the 15th of December.

United Bancshares's next dividend payment will be US$0.16 per share, and in the last 12 months, the company paid a total of US$0.51 per share. Based on the last year's worth of payments, United Bancshares has a trailing yield of 2.2% on the current stock price of $23.375. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for United Bancshares

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. United Bancshares has a low and conservative payout ratio of just 9.7% of its income after tax. United Bancshares paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit United Bancshares paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see United Bancshares's earnings have been skyrocketing, up 31% per annum for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. United Bancshares's dividend payments per share have declined at 1.6% per year on average over the past 10 years, which is uninspiring.

To Sum It Up

Is United Bancshares worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, United Bancshares looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while United Bancshares looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 3 warning signs for United Bancshares you should know about.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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